Egypt and Jordan, two key American allies in the Middle East, have extended a cautious welcome to US President George W Bush's long-awaited policy statement on the Arab-Israeli conflict.

President Bush has not overcome distrust of the Palestinian leader

The two countries appeared to be trying to put the best possible interpretation on what must have come as a serious setback.

In his statement, Mr Bush did not mention Yasser Arafat by name, but made it very clear that the ousting of the Palestinian leader was a condition for American support for the creation of a Palestinian state.

Initial reaction in the Arab press has been criticism of what is seen as Mr Bush adopting Israel's agenda.

Official Arab reaction, however, has been to underplay the issue.

Official rhetoric

So far, Saudi Arabia has remained silent.

President Bush's speech is in line with our position that an endgame and a timeline should be defined so that a political process can be relaunched on solid grounds

Official Jordanian statement

But both Egypt and Jordan appear to have chosen to ignore Mr Bush's thinly-veiled call on the Palestinians to vote their leader out of office.

Official rhetoric in the two countries has focussed instead on the distant hope of a Palestinian state that Mr Bush has held out.

The Egyptian leader, Hosni Mubarak, said he saw in Mr Bush's statement a call for Palestinian reform and not one for Mr Arafat's ousting.

He described the American statement as balanced to a large extent, and laying commitments on both Israel and the Palestinians.

He also said it contained good ideas, although there were points which needed clarification.

Mr Mubarak said he was now awaiting a visit to the region by the US Secretary of State Colin Powell, to discuss how the American ideas could be implemented.

'Salvage operation'

An official statement in Jordan welcomed Mr Bush's speech as being the beginning of the end of the conflict between Israel and the Arabs.

"President Bush's speech is in line with our position that an endgame and a timeline should be defined so that a political process can be relaunched on solid grounds," the Jordanian Government said.

It made no mention of Mr Arafat.

It is clear that both Egypt and Jordan are now involved in a salvage operation.

Their repeated lobbying has failed to convince Mr Bush to overcome his distrust of Mr Arafat.

It has also failed to pressure Israel into agreeing to a timetable for negotiations leading to a final settlement.

Now the two countries have to make the best of a difficult situation.

They have to work with what they regard as positive in Mr Bush's speech and hope that in the implementation they might be able to nudge the US into a more pro-Arab position.

Sceptical populations

A senior Arab official in Cairo said he could see several positive aspects to the Bush declaration.

Yasser Arafat has support in the Arab world

He pointed out Mr Bush's vision of a potential Palestinian state within three years, his reference to the lands seized by Israel in 1967 as occupied territories and his call on Israel to halt settlement activity.

He also said that the Palestinians had already started the process of reform, and that Mr Arafat had agreed to elections.

"If Arafat gets re-elected then neither Bush nor anyone can call for his removal," said the Arab official.

But whatever gloss Arab leaders choose to put on Mr Bush's words, they are not likely to shake their populations out of the conviction that American policy is hopelessly biased towards Israel.

This has already been the main thrust of initial press comment regarding the Bush statement, and there will probably be more in the same vein over the coming days.

As ever, Arab leaders continue to face the challenge of demonstrating to their sceptical populations that diplomacy can resolve the Arab-Israeli conflict, and that radical alternatives such as suicide bombings are counterproductive.